Texas 2023 - 88th Regular

Texas Senate Bill SB833 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New	Differences
1	1	S.B. No. 833
2	2
3	3
4	4	AN ACT
5	5	relating to consideration by insurers of certain prohibited
6	6	criteria for ratemaking.
7	7	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	8	SECTION 1. Subtitle C, Title 5, Insurance Code, is amended
9	9	by adding Chapter 565 to read as follows:
10	10	CHAPTER 565. PROHIBITED RATING CRITERIA
11	11	Sec. 565.001. PURPOSE. (a) The purpose of this chapter is
12	12	to regulate the use of environmental, social, or governance models,
13	13	scores, factors, or standards to define acts or practices that may
14	14	be unfair discrimination in the business of insurance in this
15	15	state.
16	16	(b) The legislature finds that there are numerous entities
17	17	that have developed different environmental, social, or governance
18	18	models, scores, factors, or standards that are used to:
19	19	(1) evaluate financial risks for investments in
20	20	certain businesses or industries; or
21	21	(2) encourage or discourage business dealings or
22	22	investments with certain types of businesses or industries.
23	23	(c) To the extent that the use of such models, scores,
24	24	factors, or standards are not based on sound actuarial principles,
25	25	or do not bear a reasonable relationship to the expected loss and
26	26	expense experience related to insurance risks, the rating of
27	27	certain businesses or risks in this state without an ordinary
28	28	insurance business purpose may adversely affect the economy, a
29	29	sector of the economy, productivity, competition, jobs, the
30	30	environment, or the public health and safety of this state or a
31	31	portion of this state.
32	32	Sec. 565.002. DEFINITION. In this chapter, "insurer" means
33	33	an insurance company or other entity authorized to engage in the
34	34	business of insurance in this state. The term includes:
35	35	(1) a stock or mutual property and casualty insurance
36	36	company;
37	37	(2) a Lloyd's plan;
38	38	(3) a reciprocal or interinsurance exchange;
39	39	(4) a county mutual insurance company;
40	40	(5) a farm mutual insurance company;
41	41	(6) any insurer writing a line of insurance regulated
42	42	by Title 10;
43	43	(7) all life, health, and accident insurance companies
44	44	regulated by the department, including:
45	45	(A) a stock or mutual life, health, or accident
46	46	insurance company;
47	47	(B) a fraternal benefit society;
48	48	(C) a nonprofit hospital, medical, or dental
49	49	service corporation, including a group hospital service
50	50	corporation operating under Chapter 842; and
51	51	(D) a stipulated premium company; and
52	52	(8) a health maintenance organization operating under
53	53	Chapter 843.
54	54	Sec. 565.003. APPLICABILITY OF CHAPTER. (a) Except as
55	55	provided by this section, this chapter applies only to insurance
56	56	policies issued and delivered by an insurer in this state.
57	57	(b) This chapter does not require the filing of rates for
58	58	any line, type of insurer, or type of insurance business that is not
59	59	specifically required by statute to file rates with the department.
60	60	(c) This chapter does not apply to:
61	61	(1) fidelity, guaranty, and surety bonds; or
62	62	(2) crop insurance.
63	63	Sec. 565.004. CONSTRUCTION OF CHAPTER. (a) This chapter
64	64	shall be construed and applied to promote the underlying purposes
65	65	as provided by Section 565.001.
66	66	(b) This chapter may not be construed or applied to require:
67	67	(1) an insurer to write any line or type of business
68	68	that the insurer does not write; or
69	69	(2) a material change in the insurer's current
70	70	business plans.
71	71	(c) Nothing in this chapter is intended to create any type
72	72	of private cause of action or independent basis in a civil or
73	73	criminal proceeding.
74	74	(d) Nothing in this chapter is intended to prohibit the use
75	75	of information that is relevant and related to the risk being
76	76	insured even if that information may also be used or considered in
77	77	developing an environmental, social, or governance model, score,
78	78	factor, or standard.
79	79	Sec. 565.005. PROHIBITED CRITERIA. Except as provided by
80	80	Section 565.006, an insurer may not use an environmental, social,
81	81	or governance model, score, factor, or standard to charge a rate
82	82	different than the rate charged to another business or risk in the
83	83	same class for essentially the same hazard.
84	84	Sec. 565.006. EXCEPTION. An insurer does not violate
85	85	Section 565.005 if the insurer's actions are based on an ordinary
86	86	insurance business purpose, including the use of sound actuarial
87	87	principles, or financial solvency considerations reasonably
88	88	related to loss experience for the different types of risks and
89	89	coverages made available by a particular insurer.
90	90	Sec. 565.007. REGULATORY ACTION. Nothing in this chapter
91	91	is intended to authorize the department to adopt any rule, model, or
92	92	standard requiring an insurer to use any environmental, social, or
93	93	governance model law, regulation, or other standard that has not
94	94	been specifically authorized by statute, including:
95	95	(1) a rule, model, or standard required under any
96	96	federal law that does not preempt state law under the
97	97	McCarran-Ferguson Act (15 U.S.C. Section 1012(b)); or
98	98	(2) a rule, model, or standard required by any
99	99	national organization, including the National Association of
100	100	Insurance Commissioners, that has not been specifically authorized
101	101	by statute.
102	102	SECTION 2. Chapter 565, Insurance Code, as added by this
103	103	Act, applies only to an insurance policy that is delivered, issued
104	104	for delivery, or renewed in this state on or after January 1, 2024.
105	105	SECTION 3. This Act takes effect September 1, 2023.
106	106	______________________________ ______________________________
107	107	President of the Senate Speaker of the House
108	108	I hereby certify that S.B. No. 833 passed the Senate on
109	109	May 11, 2023, by the following vote: Yeas 20, Nays 11.
110	110	______________________________
111	111	Secretary of the Senate
112	112	I hereby certify that S.B. No. 833 passed the House on
113	113	May 24, 2023, by the following vote: Yeas 86, Nays 54, one
114	114	present not voting.
115	115	______________________________
116	116	Chief Clerk of the House
117	117	Approved:
118	118	______________________________
119	119	Date
120	120	______________________________
121	121	Governor